US producer price index rises more than expected at 1.7 per cent YOY

The US Producer Price Index rose by 1.7 per cent year-on-year, and 0.5 per cent month-on-month. Analysts predicted a growth of 1.4 per cent year-on-year and 0.1 per cent month-on-month.

Oil prices drove PPI higher, and this morning's escalation of events in Syria will do little to abate this. Brent and WTI crude oil futures rose this morning following the authorisation of president Obama to arm Syrian rebels. But recent instability in the Middle East hasn’t had as much effect as might be expected, with prices remaining relatively stable.

Demand concerns seem to be having more of an effect, with futures falling 0.9 per cent yesterday after the World Bank said the global economy would grow by just 2.2 per cent this year.

On Bloomberg TV earlier today, experts discussing this noted that the key driver of oil prices currently is weak demand. If demand does pick up, they suggest supply issues will begin to affect prices to a greater extent.